1. Salsse Roofing Services was formed on December 01, 2016.

The following transactions took

place during the first month:

1) J. Salsse invested $96,000 cash in the company, as its sole owner.

2) Hired two employees to work in the warehouse. They will each be paid a salary of $3,000
per month.
3) Signed a 2-year rental agreement on a warehouse; paid $36,000 cash in advance for the
first year. The portion of the cost related to December 2016 is an expense for this month.
4) Purchased Land and Building costing $80,000. A cash payment of $30,000 was made
immediately; the remainder will be paid in 6 months.
5) Purchased office supplies for $8,000 on account.
6) Total revenues earned were $55,000 in which $25,000 in cash and $30,000 on account.
7) Paid $400 to suppliers for accounts payable due.
8) Purchased office supplies of cash $1,000.
9) Received $ 4,500 advance from a company for providing services.
10) Received $15,000 from customers in payment of accounts receivable.
11) Withdraw cash $3,000 for personal use.
12) Paid $2000 of salaries.

Instructions:
a. Prepare journal entries to record each of the events listed.

b. Post to the ledger.

c. Prepare a trial balance as of December 31, 2016.

***Prepaid expense=Asset

*** Unearned revenue=Liability

Problem: 01

Requirement: a

Salsse Roofing Services

Journal

Transaction Accounts Title Debit Credit

NO.
Cash $96,000
1.
J. Salsse Capital $96,000
No entry -
2.
-
Prepaid Rent $33,000
3. Rent Expense $3,000
Cash $36,000
Land & Building $80,000
4. Cash $30,000
Accounts Payable 50,000
Office Supplies $8,000
5.
Accounts Payable $8,000
Cash $25,000
6. Accounts Receivable $30,000
Service Revenue $55,000
Accounts Payable $400
7.
Cash $400
Office Supplies $1,000
8.
Cash $1,000
Cash $4,500
9.
Unearned Revenue $4,500
Cash $15,000
10.
Accounts Receivable $15,000
Drawings $3,000
11.
Cash $3,000
Salaries Expense $2,000
12.
Cash $2,000
Requirement: b

Ledger

Cash
Balance
Date Explanations Debit Credit
Debit Credit
J. Salsse Capital $96,000 - $96,000 -
Prepaid Rent - $33,000 63,000 -
Rent Expense - 3,000 60,000 -
Land & Building - 30,000 30,000 -
Service Revenue 25,000 - 55,000 -
Accounts Payable - 400 54,600 -
Dec Office Supplies - 1000 53,600 -
01-31 Unearned Revenue 4,500 - 58,100 -
Accounts Receivable 15,000 - 73,100 -
Drawings - 3,000 70,100 -
Salary Expense - 2,000 68,100 -

68,100 -
Capital
Balance
Date Explanations Debit Credit
Debit Credit
Dec Cash - $96,000 - $96,000
01-31
- $96,000

Prepaid Rent
Balance
Date Explanations Debit Credit
Debit Credit
Dec Cash $33,000 - $33,000 -
01-31 $33,000 -

Rent Expense
Balance
Date Explanations Debit Credit
Debit Credit
Dec Cash $3,000 - $3,000 -
01-31 $3,000 -

Land and Building

Balance
Date Explanations Debit Credit
Debit Credit
Dec Cash $30,000 - $30,000 -
01-31 Accounts Payable 50,000 - 80,000 -
$80,000 -

Accounts Payable
Balance
Date Explanations Debit Credit
Debit Credit
Dec Land & Building - $50,000 - $50,000
01-31 Office Supplies - 8000 - 58,000
Cash $400 - - 57,600
- 57,600
Office Supplies
Balance
Date Explanations Debit Credit
Debit Credit
Dec Accounts Payable $8000 - 8,000 -
01-31 Cash 1000 - 9,000 -
9,000 -

Accounts Receivable
Balance
Date Explanations Debit Credit
Debit Credit
Dec Service Revenue $30,000 - $30,000 -
01-31 Cash - $15,000 15,000 -
$15,000 -

Service Revenue
Balance
Date Explanations Debit Credit
Debit Credit
Dec Cash - $25,000 - $25,000
01-31 Accounts Receivable - 30,000 - 55,000
 - $55,000

Unearned Revenue
Balance
Date Explanations Debit Credit
Debit Credit
Dec Cash - $4,500 - $4,500
01-31 - $4,500

Drawings
Balance
Date Explanations Debit Credit
Debit Credit
Dec Cash $3,000 - $3,000 -
01-31 $3,000 -

Salaries Expense
Balance
Date Explanations Debit Credit
Debit Credit
Dec Cash $2,000 - $2,000 -
01-31 $2,000 -
Requirement: C
Salsse Roofing Services
Trial Balance
As on December 31, 2016
SL. No Accounts Title Debit Credit
1. Cash $68,100 -
2. J. Salsse Capital - $96,000
3. Rent Expense 3000 -
4. Prepaid Rent 33,000 -
5. Land and Building 80,000 -
6. Accounts Payable - 57,600
7. Accounts Receivable 15,000 -
8. Service Revenue - 55,000
9. Office Supplies 9,000 -
10. Unearned Revenue - 4,500
11. Drawings 3,000 -
12. Salary Expense 2,000 -
$2,13,100 $2,13,100
Rules of Debit and Credit:

Account Type Debit (Dr) Credit (Cr)

Asset Increase Decrease
Liability Decrease Increase
Owner’s Equity Decrease Increase
Expense Increase Decrease
Revenue Decrease Increase